The US Senate on Tuesday passed a credit card bill to eliminate sudden interest rate increases and excessive fees in order to protect millions of consumers.

The 90-5 vote, following a 357-70 vote in the House last month, made it likely that President Barack Obama could sign it into law by week's end.

"This is a victory for every American consumer who has ever suffered at the hands of a credit card company," said Christopher Dodd, chairman of the Senate's Banking Committee after the vote.

Under the bill passed by the House, double-cycle billing and retroactive rate hikes would be prohibited and companies would be prevented from giving credit cards to anyone under 18.

If the bill becomes a law, it won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.

Meanwhile, the Senate bill requires those under 21 who seek a credit card to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.

Consumers would have to be notified of rate increases 45 days in advance. And companies could not charge a late fee if they were late processing a payment.

The House and Senate will have to reconcile their two versions of the legislation in the next few days.

As millions of credit card holders struggle with high balances amid a deep recession, President Barack Obama has been pushing for more actions to give consumers greater protections.

"I think that there has to be strong and reliable protections for consumers, protections that ban unfair rate increases and forbid abusive fees and penalties," said the president last month after meeting 14 executives from companies including American Express, Visa and MasterCard.

In fact, the US Federal Reserve has already ordered new rules that are designed to enforce a host of new consumer protections. The rules will take effect July 2010.

Credit card companies, however, have argued that new regulations may make economic situation even worse by shrinking lenders' ability, resulting in less credit available to consumers at just the wrong time.

"What has been a short-term revolving unsecured loan will now become a medium-term unsecured loan, which is significantly more risky," said Edward Yingling, president and CEO, American Bankers Association.

"It is a fundamental rule of lending that an increase in risk means that less credit will be available and that the credit that is available will often have a higher interest rate," he added.

Almost 80 percent of US households have credit cards. Credit-card debt has increased by 25 percent in the past 10 years, reaching US$963 billion by January, according to figures released by the White House.

(Xinhua News Agency May 20, 2009)